- Special Projects
HILO, Hawaii Island – It’s not the first, but the second devastating punch that often causes the knockout.
Puna may be facing the same scenario.
The rural district remains reeling from a months-long volcanic disaster that destroyed agricultural crops, buried a prized coastline and turned its sole fishing port into an inaccessible beach. In a final, cruel blow, the fiery spectacle of Kilauea volcano has stopped, leaving little incentive for tourists to visit.
But some still do. They don’t find resorts or even big hotels, so most needing overnight lodging look to the hundreds of homes located in residential neighborhoods and offered on travel websites like Airbnb and VRBO, which stands for “vacation rental by owner.”
Available a maximum of 30 consecutive days, the short-term vacation rentals represent one of Puna’s remaining economic sectors.
That success is being threatened by proposed government regulations that could force operators off agricultural land that comprises virtually all of Puna – an area the size of Oahu – while also imposing fees and other mandates.
“This district is dying, and this is the final death blow,” Puna Councilwoman Eileen O’Hara said of Bill 108.
O’Hara was the lone dissenter Nov. 2 when the Hawaii County Council voted 5-1 to pass the bill on the first of two required votes. Fellow Puna Councilwoman Jen Ruggles isn’t weighing in on the bill, or any other, because she fears doing so would constitute “war crimes” against sovereign Native Hawaiians.
O’Hara, however, lost her re-election bid.
The measure’s purpose is to “manage the impacts” of short-term rentals and would not apply to hosted bed and breakfast establishments or lodging located in designated zones. It’s aimed at preserving housing inventories in tight markets like the tourism-based Kona Coast, reducing neighborhood noise and traffic, and generating applicable taxes.
No short-term rentals would be allowed on any lot in the state agriculture district and created after June 4, 1976, which is when the state started permitting only farm dwellings used to house agricultural workers on those lands. Some of the Puna neighborhoods were made after the deadline making them ineligible for short-term rentals.
Owners of older ag lots may qualify for a “nonconforming use certificate” provided they can prove the short-term rental operation existed before the law takes effect since no new businesses would be allowed. Additional requirements include paying $250 yearly in addition to the standard one-time $500 tax and obtaining final building approval, which is another deal-breaker for certain operators.
The threat of those impacts has prompted bill opponents to claim lawmakers simply don’t care about Puna, which includes the Volcano community.
“This disturbs me,” Councilwoman Maile David, who represents Volcano, Kau and part of Kona, said of being labeled as uncaring. “We are not bad people. We are just trying to find a solution.”
Hawaii County is moving toward joining other jurisdictions in regulating short-term rentals. Maui voters, for example, passed a charter amendment that would impose fines of up to $20,000 for running a vacation rental without a permit.
But the Big Island’s bill does not seek to cap units like other counties have done.
Maui County permits up to 416 short-term rentals, while the City and County of Honolulu is not allowing any more nonconforming units to the 775 that existed two years ago, officials said.
By comparison, the Kilauea eruption has destroyed 400 short-term rentals in Puna alone or about half of the district’s inventory, according to O’Hara.
According to the Hawaii Island Visitors Bureau, 8,647 short-term rentals were advertised for rent in 2017, up 16.7 percent from the prior year. About 75 percent are not registered with the state and therefore pay no general exercise or transient accommodations taxes, according the bureau’s data.
A review of the main websites list average pricing of about $250 a night for a Big Island rental that ranges from a room to an entire house.
“It’s a huge economic opportunity – virtually turning your home into a business,” said Livit Callentine, a senior Maui County planner whose work specializes in short-term rentals.
Some Maui landowners applied for short-term rental permits within a month of acquiring their property, which is why landowners there now must wait five years before becoming eligible to open a short-term rental, Callentine said.
“We found so many people buying properties and turning them into boutique hotels that had never even been to the island that we were inundated,” she said. “It was horrible, horrible.”
Callentine suggested Big Island lawmakers also implement an ownership requirement if they want to preserve affordable-housing stocks. None is currently proposed.
“Short-term rentals incentivize investment for profit and exacerbate the high cost of home ownership by driving up the demand-to-cost ratio,” Honaunau resident Charles Young wrote in testimony supporting the Big Island bill.
Young said short-term rentals are especially bad in residential neighborhoods because they strain infrastructure, noting they have caused South Kona’s Hookena Beach Park, where he works for a nonprofit, to become overcrowded beyond capacity.
But while some areas of Hawaii Island are overly busy, others are desperate for people.
“We don’t have a housing shortage in Puna,” O’Hara said of the empty homes and vacant lots she said are available throughout the district.
O’Hara failed to convince a single colleague to oppose Bill 108 or, as a consolation, give her district five years before the law would take effect.
The measure still requires a second approval vote by a council majority, scheduled for Nov. 20, before it may be sent to Mayor Harry Kim for his expected signature into law.
If that happens, short-term rental owner Sue Barrackman warned lawmakers that she’ll join a parade of property owners who will take Hawaii County to court for an illegal taking of their land-use rights.
“They are legislating us out of existence,” she later told Civil Beat.
Barrackman said she runs a short-term rental in Puna’s Hawaiian Beaches neighborhood and has entered escrow on a nearby home she plans to use as her main dwelling.
“It’s my whole life,” she told lawmakers.
Under the bill, short-term rental owners would have to apply for operating approval within 180 days of the bill’s effective date of April 1, 2019.
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